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REAL ESTATE U FINAL EXAM STUDY GUIDE
QUESTIONS AND ANSWERS | 100% CORRECT
"Bundle of Rights - CORRECT ANSWER The premise that the ownership of real estate consists of the
ownership of various rights associated with it. These rights include the right to use and/or occupy, the right to sell in whole or in part, the right to lease, the right to bequeath and the right to do none of the foregoing.
- Includes the right to quiet enjoyment"
"Encumbrance - CORRECT ANSWER Any right to or interest in the land interfering with its use or transfer,
or subjecting it to an obligation."
"Quitclaim Deed - CORRECT ANSWER A deed which conveys simply the grantor's rights or interest in real
estate, without any agreement or covenant as to the nature or extent of that interest, or any other covenants; usually used to remove a cloud from the title."
"Secondary Mortgage Market - CORRECT ANSWER The market where mortgage loans and servicing
rights are bought and sold between mortgage originators, mortgage aggregators (securitizers) and investors."
"Loan-to-Value (LTV) - CORRECT ANSWER A financial term used by lenders to express the ratio of a loan
to the value of an asset (property) purchased.
- Determined by using the Purchase Price or the Appraised Value, whichever is less."
"Appraisal - CORRECT ANSWER An estimate of a property's value by an appraiser who is usually
presumed to be expert in his work."
"Cost Approach - CORRECT ANSWER A method of estimating the value of real property by calculating a
current construction cost, subtracting accrued depreciation and adding a land value obtained from the market.
- Used for specialized properties that don't have many comparables."
"Building Department - CORRECT ANSWER A town or city agency that oversees and reviews building
applications by licensed professionals to ensure compliance with local building code and zoning ordinances."
"Deductible - CORRECT ANSWER The amount of expenses that must be paid out of pocket before an
insurer will pay any expenses."
"Umbrella Policy - CORRECT ANSWER Insurance policy that covers amounts above those covered under
one or more other primary policies, and which does not pay until the losses exceed a certain sum. Also called excess insurance."
"The Offering Plan - CORRECT ANSWER A key document provided during the purchase of a cooperative,
which includes information required to be disclosed to the purchaser."
"Board Package - CORRECT ANSWER A series of documents submitted for the review by a cooperative
board."
"General Agent - CORRECT ANSWER Someone authorized to transact every kind of business for the
principal (Example: Property Manager)."
"Operating Budget - CORRECT ANSWER An amount of money set aside by the owner for a specific period
for the property manager to manage the property effectively."
"Management Agreement - CORRECT ANSWER A contract between the owner of a property and
someone who agrees to manage it."
"Property Management Report - CORRECT ANSWER An accounting report issued periodically by the
property manager to the owner outlining all income and expenditures for that accounting period."
"Sponsor - CORRECT ANSWER A licensed real estate broker that holds the license of a salesperson."
""Summary of Your Submission" - CORRECT ANSWER Obtained after your register for the New York State
Salesperson exam using eAccessNY. You must bring this with you when taking the State exam."
"Misdemeanor - CORRECT ANSWER A crime punishable by up to a year in prison and/or a $1,000 fine."
"Listing Agreement - CORRECT ANSWER An employment contract between principal and agent,
authorizing the agent to perform services for the principle involving the latter's property."
"OLD CAR - CORRECT ANSWER - Obedience
"Title - CORRECT ANSWER Legal term for a bundle of rights in a piece of property in which a party may
own either a legal interest or equitable interest."
"Estate for Years - CORRECT ANSWER A leasehold estate for any specific period of time. An estate for
years is not automatically renewed."
"Express Contract - CORRECT ANSWER A contract in which all elements of a contract are specifically
stated (offer, acceptance, consideration)."
"Attorney Review Clause - CORRECT ANSWER A clause found in real estate contracts that may allow
buyers to walk away from an agreed upon sale for any reason."
"Mortgage Contingency Clause - CORRECT ANSWER A clause in a contract that states a mortgage must
be obtained in order for the contract to be binding."
"Eviction - CORRECT ANSWER A legal proceeding by a lessor landlord to recover possession of real
property."
"Holdover Tenant - CORRECT ANSWER A tenant who remains in possession of leased property after the
expiration of the lease term."
"Triple Net Lease - CORRECT ANSWER A lease commonly found in a building with a single, long-term
tenant."
"Satisfaction of Mortgage - CORRECT ANSWER A document acknowledging the payment of a mortgage
debt."
"Amortization - CORRECT ANSWER The process by which a loan principal decreases over the life of a
loan."
"Condemnation - CORRECT ANSWER Taking private property for public use, with fair compensation to
the owner; exercising the right of eminent domain."
"Police Power - CORRECT ANSWER The right of any political body to enact laws and enforce them, for the
order, safety, health, morals and general welfare of the public."
"Variance - CORRECT ANSWER The authorization to improve or develop a particular property in a
manner not authorized by zoning."
"Stud - CORRECT ANSWER Vertical framing members found in wall construction. Typically placed 12",
16" or 24" on center."
"Beam - CORRECT ANSWER A horizontal structural member that supports a floor. Beams are typically
wood, cold formed metal framing or steel."
"Bearing Walls - CORRECT ANSWER Structural walls that transfer building loads down to the foundation.
Joists, beams, and roofs are typically supported by bearing walls."
"Bond Beam - CORRECT ANSWER Concrete set in soil"
"Circuit Breaker - CORRECT ANSWER The safety valves for electrical systems"
"Construction Drawings - CORRECT ANSWER Drawings produced by Architects that describe the
quantities of a building."
"Specifications - CORRECT ANSWER A written document produced by an Architect that describes the
quality of construction for a building."
"Title X - CORRECT ANSWER a Federal law that makes real estate licensees liable for the disclosure of
lead paint."
"Radon - CORRECT ANSWER A colorless, odorless gas that is emitted from soils, rocks and water as a
result of radioactive decay in certain areas of the country."
"Asbestos - CORRECT ANSWER A naturally occurring mineral fiber sometimes found in older homes. It is
hazardous to health when a possibility exists of exposure to inhalable fibers. Homeowners should be alert for friable asbestos and always seek professional advice in dealing with it."
"Asbestosis - CORRECT ANSWER A chronic lung disease caused by inhaling asbestos fibers."
"Lead - CORRECT ANSWER A material used in pipes and paint of many older homes."
"Clean Air Act (CAA) - CORRECT ANSWER Federal law designed to control air pollution on a national
level."
"Sponsor - CORRECT ANSWER The developer or owner organizing and offering for sale a condominium
or cooperative development."
"Leverage - CORRECT ANSWER The use of borrowed capital (mortgage) to increase the potential return
of an investment."
"Pro-forma Statement - CORRECT ANSWER An accounting statement that forecasts income and
expenses for a period of time, typically five or more years."
"Cap Rate - CORRECT ANSWER NOI / Purchase Price"
"Liquid - CORRECT ANSWER The ability to have cash readily available to support the demands of running
and maintaining real property"
"Gross Income - CORRECT ANSWER The total amount collected from rents and other income producing
opportunities."
"Capital Gain - CORRECT ANSWER A profit that results from the sale of a property where the amount
realized from the sale exceeds the purchase price."
"Boot - CORRECT ANSWER Cash received in a tax-deferred exchange"
"Tax Shelter - CORRECT ANSWER Any method of reducing taxable income resulting in a reduction of the
payments to tax collecting entities, including state and federal governments."
"Straight-line Depreciation - CORRECT ANSWER A method of calculating the depreciation of an asset
which assumes the asset will lose an equal amount of value each year.
- A residential property is depreciated over a 27.5 year period.
- A commercial property is depreciated over a 39 year period."
"1031 Exchange - CORRECT ANSWER - 45 days to identify a new property
- 180 days to close on a new property"
"Mortgage Broker - CORRECT ANSWER An intermediary who brings mortgage borrowers and mortgage
lenders together, but does not use its own funds to originate mortgages."
"Mortgage Banker - CORRECT ANSWER A company, individual or institution that originates mortgages.
Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages."
“Article 12-A of the NYS Real Property Law - CORRECT ANSWER The section of the New York Real
Property Law pertaining to real estate salespersons and brokers.
- Primary purpose is to "Protect the Public"
- Requires a salesperson to be at least 18 years of age
- Requires a broker to be at least 20 years of age"
"Pocket Card - CORRECT ANSWER A card issued by the Department of State to each licensee which
contains the photo, name and business address of the licensee, and, in the case of a real estate salesperson, the name and business address of the broker with whom he or she is associated and shall certify that the person whose name appears thereon is a licensed real estate broker or salesperson.
- Must be carried by the agent at all times when serving as a salesperson."
"Fiduciary - CORRECT ANSWER A person who on behalf of or for the benefit of another transacts
business or handles money or property not the person's own; such relationship implies great confidence and trust."
"Disclosure Regarding Real Estate Agency Relationships Form - CORRECT ANSWER A written
explanation, to be signed by a prospective buyer or seller of real estate, explaining to the client the role that the broker plays in the transaction.
- First document to be submitted to all prospective clients"
"Independent Contractor Relationship - CORRECT ANSWER A person that provides services to another
under terms specified in a contract or within a verbal agreement. An independent contractor is not an employee.
- The agent does not have to work in a specific location
- The broker cannot control the agent's work activities"
"Littoral Rights - CORRECT ANSWER The right of a property owner whose land borders on a body of
water, such as a lake, ocean or sea, to reasonable use and enjoyment of the shore and water the property borders on."
"Riparian Rights - CORRECT ANSWER The right of a property owner whose land borders a natural water
course, such as a river, to reasonable use and enjoyment of the water that flows past the property. This term literally means "riverbank""
- 6 years for material defects
- 2 years for plumbing, electrical, and HVAC systems"
"Income Approach - CORRECT ANSWER An appraisal technique whereby the value of an income
producing property is estimating by capitalizing its net operating income using an appropriate capitalization rate. Value = Income / Rate.
- Commonly used in commercial properties"
"Sales comparison approach - CORRECT ANSWER Valuation method which compares a subject
property's characteristics with those of comparable properties which have recently sold in similar transactions"
"Blockbusting - CORRECT ANSWER The practice of inducing homeowners in a particular neighborhood to
sell their homes quickly, often at below market prices, by creating the fear that the entry of a minority group or groups into the neighborhood will cause a precipitous decline in property values."
"Fair Housing Act of 1968 - CORRECT ANSWER A federal prohibition that protects buyer/renter of a
dwelling from seller/landlord discrimination with regards to race, color, religion, gender, national origin, familial status, or disability."
